Migrant entrepreneurship in China: entrepreneurial transition and firm performance

Abstract

China is experiencing rapid urbanization during which millions of migrants move from rural to urban areas. Recently, China initiated the national strategy of “mass entrepreneurship and innovation” to tap into the innovative potential and promote entrepreneurial development among the general public, with rural migrants being one of the targeted groups of this policy. This context calls for a better understanding of rural migrants’ entrepreneurial formation and transition. Using the 2012 and 2014 Chinese Labor-force Dynamics Survey (CLDS) data, we test the importance of human capital, social capital, and community trust on migrants’ entrepreneurial entry with cross-sectional and panel data analyses. We find that rural migrants’ entrepreneurship rates and entrepreneurial entry rates surpass both their urban resident and rural resident counterparts, indicating the active role they play in urban business landscape. While individual characteristics and social networks play similar roles in these three groups’ entrepreneurial transition, rural migrants’ business activities are particularly shaped by their perception of communities. Further analysis of migrant-owned businesses reveals their over-representation in main-street industries but their firm performances are on par with other businesses, suggesting their positive economic contribution in cities.

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Fig. 1

Notes

  1. 1.

    Sampling framework, parameter design, coding scheme, and additional information of the data can be found at http://engcss.sysu.edu.cn/. Provinces include Hebei, Shanxi, Liaoning, Jilin, Heilongjiang, Jiangsu, Zhejiang, Anhui, Fujian, Jiangxi, Shandong, Henan, Hubei, Hunan, Guangdong, Guangxi, Sichuan, Guizhou, Yunnan, Gansu, Qinghai, Ningxia, Xinjiang, and Inner Mongolia. Direct municipalities are Beijing, Tianjin, Shanghai, and Chongqing.

  2. 2.

    The overall retention rate of 60% compares favorably to the retention rates usually reported in other studies. Sample composition did not change significantly between 2012 and 2014 along the dimensions we consider in the analysis. While we do not rule out potential biases induced by the differential attrition, CLDS has redesigned survey weight to make the panel sample nationally representative. We include this weight in the panel sample analysis to ward off remaining biases.

  3. 3.

    According to the 2012 and 2014 National Bureau of Statistics of China, the entrepreneurial rate were 11 and 13%, respectively.

  4. 4.

    We exclude individuals with urban hukou but live in rural areas as they are very small in number.

  5. 5.

    Value 0 (10) is assigned when respondents choose the first (last) category.

  6. 6.

    Statistical conclusions from specification (1) and (2) are not changed by clustering standard errors at the province level. Results are available upon request.

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Acknowledgements

L.Y. appreciates the financial support from Chinese Ministry of Education Key Research Center Major Project 16JJD630013.

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Correspondence to Cathy Yang Liu.

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Liu, C.Y., Ye, L. & Feng, B. Migrant entrepreneurship in China: entrepreneurial transition and firm performance. Small Bus Econ 52, 681–696 (2019). https://doi.org/10.1007/s11187-017-9979-y

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Keywords

  • Migrant entrepreneurship
  • Firm performance
  • China
  • Chinese Labor-force Dynamics Survey (CLDS)

JEL codes

  • L25
  • L26
  • R23